Second-Tier Producers Hopeful About 2011
David Perry -- Furniture Today, December 24, 2010
HIGH POINT - Tier-two bedding producers are generally more optimistic about growth prospects in the new year than are their larger rivals in the bedding arena.
But, with a few exceptions, the producers don't see a real sales boom in 2011.
The smaller producers back up their growth forecasts with a variety of points. They see more consumer interest in healthier sleep, say higher-end consumers will not be denied their wants, think their companies are better positioned for growth than the big "S" brands, and believe the Baby Boomers will continue to seek out products that help them find comfort.
But some of those producers inject strong notes of caution, saying that no quick fixes to fundamental economic issues are coming. This more conservative view holds that the current challenged business climate will remain in place for some time to come.
Here's a review of the 2011 forecasts of a group of tier-two bedding producers.
► Avi Barssessat, CEO of Hollandia International: "We are bullish about the opportunity for higher-end, feature-enhanced products Hollandia offers in the United States. The stagnation in the bedding market is primarily due to the price cutting ‘pit' most manufacturers dug for themselves years ago. Yes, the customer who only wants to pay $399 and $499 is scared by the economy and hesitant to make a purchase. But that is not the case for the luxury consumer."
► Len Burke, director of retail and marketing for Klaussner's Enso Sleep Products unit: "We see a continued growth in the bedding business for next year, and a demand for a better quality sleep set with a focus on a healthier night's sleep. In this current economy, as we rise from one of the worst financial situations in our nation's history, consumers are crying out for something logical and meaningful in which they can attach value. Enso is stepping in on the scene just in time to meet the consumer's demand for something more from their brands."
► Stuart Carlitz, CEO of Eclipse and Eastman House: "Competition will be fierce with hopes of gaining market share at the expense of other producers. The secondtier producers will be in the strongest position to take business from the ‘S' brands above and the non-branded below."
► David Corbin, copresident, Southerland: "The overall outlook will continue to be for very slow industry growth."
► Jamie Diamonstein, president, Paramount Sleep: "For 2011, I see limited change in the consumers' buying patterns and purchases. I believe that retail products at $999 and below will continue to put pressure on both the retailer and the manufacturer as retailers aggressively promote price and value to attract customers. Purchases of $1,000, $2,000, $3,000 and above will be stable as high-end consumers cautiously remain in the market."
► David Farley, CEO, Anatomic Global: "The specialty sleep category will continue to drive most of the industry growth in the coming year, mainly due to the aggressive advertising of Tempur- Pedic driving traffic to sleep shops. Most of the growth is also being taken from innerspring sales, as consumers are really responding to the performance benefits of visco mattresses and are willing to make more of an investment in sleep surfaces that can give them a more comfortable and restorative night's sleep."
► Carmi Fredman, president, Glideaway Sleep Products: "We are looking for modest growth at best. Until we shake high unemployment numbers, have an economic stimulus plan that actually works and restore consumer confidence, the economy will remain in the stupor that has defined it for the past two years. It will certainly take another three quarters for the correction to take place, but there is hope that in the fourth quarter of 2011 there will be an uptick."
► Neal Grigg, president, Carolina Mattress Guild: "Bedding will continue to be challenged due largely to the slow economic recovery. While corporately businesses are getting stronger, the high rate of unemployment and continued lack of long-term confidence will limit growth."
► Bill Hammer, president, Shifman Mattresses: "Overall retail has recovered substantially in the past six months. As this trend continues, bedding sales should also continue to improve."
"There's a hyper focus on mattresses in the $299 to $799 range. These low price points are driving down the profits and average selling price for manufacturers and retailers. "Earl Kluft, E.S. Kluft & Co.
► Earl Kluft, CEO, E.S. Kluft & Co.: "The race to the bottom, as I like to refer to it, will continue to send the industry in a downward spiral. There's a hyper focus on mattresses in the $299 to $799 range. These low price points are driving down the profits and average selling price for manufacturers and retailers. The specialty sleep and luxury category (mattresses priced over $3,000) will continue to grow and help bring up the average ticket, but it will not be enough to move the needle against the frenzy at the bottom."
► Kurt Ling, CEO, Pure LatexBliss: "We are optimistic about next year. We see specialty bedding continuing to grow by driving AUSP and margin dollars."
"I am not as pessimistic as many of my peers in the business because I see a small but growing segment of consumers spending a little more for a mattress. "
Marco Magni, Magniflex
► Marco Magni, global sales director, Magniflex: "I am not as pessimistic as many of my peers in the business because I see a small but growing segment of consumers spending a little more for a mattress. I am also encouraged by the aging of the Baby Boomer population, a demographic group that demands more comfort features and is willing to pay more for them."
► Jim Nation, president, Five Star: "2011 will be more of the same. It will be difficult. The new reality is that there is not much bounce."
► Bob Naboicheck, CEO, Gold Bond: "The bedding industry will continue to struggle in 2011 because of high unemployment, low consumer confidence and the lackluster housing market. In fact, I am more pessimistic on the unemployment front, as we are now beginning to see local, state and federal employees being laid off as a result of the significant budget deficits in most states.... If you aren't working or are afraid of losing your job, you put off the purchase of major ticket item like a mattress for as long as you can. And when you buy, you buy modestly, looking for the most value at the lowest cost."
► Jimmy Orders, president, Park Place: "Housing and employment control our business prospects. Housing is still in a deflationary mode and it could well take 10 to 20 years to return employment to pre-2007 levels. What you see is what you get for the foreseeable future in the mattress business."
► Ralph Rossdeutscher, president, Natura: "The industry had a dismal fall and is trying to sort things out. Will it be a race to zero? The high end is selling and the low end is selling and the middle needs more ‘oomph.'"
► Dani Serven, project manager, South Bay International: "We are very optimistic due to our e-commerce business. We are on track for very realistic growth."
► Dave Young, CEO, VyMaC Corp.: "In looking at retailers, we believe there will be a flat to downward trend as reaction to consumer price points continuing to be a race to the bottom. We feel the factory-direct segment continues to hold its own as a shadow of its former scale, but will prosper better with average unit selling price and consumer value perception on the rise. Internet sales will continue to grow and should not be overlooked as a serious spike opportunity."
► Mike Zippelli, CEO, Classic Brands: "In 2011, we will see a slow and modest recovery with only a slight increase in sales."
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